Is Apple or Google Winning the App War?

Follow the money -- iOS users outspend Android users by four to one. Apple investors will profit too.

Jul 9, 2014 at 11:00AM

Internet search giant Google (NASDAQ:GOOG) (NASDAQ:GOOGL), usually tight-lipped on such information, released a few business stats last month at its annual developer's conference. Some of the numbers bantered about just confirm what those in the know already knew. And it's just another sign that mobile operating system market share really doesn't mean anything.

Google, despite its dominance in the mobile operating system battle, stated that it paid $5 billion to app developers last year. This was only half as much as tech rival Apple (NASDAQ:AAPL) did, although iOS has less than half as many monthly active users as Android (470 million vs. 1 billion). 

Screen Shot

Source: Fortune

As someone once said in a movie from the 1970's, "follow the money". In this case, four times the money, on a per-user basis, generated by app sales is flowing to Cupertino rather than Mountain View.

What does this mean for investors in the two companies?

Apple app fever
Apple and its shareholders are currently reaping the rewards of its ecosystem and all signs indicate that this will continue.

The app business is becoming as important as some of Apple's hardware operations. The company has been reporting double-digit expansion in "services", which includes mobile app sales. Revenue there now equals that generated by Mac sales, and is catching up to that generated by the iPod where growth is declining. Apple knows where to put its money and investors will benefit from this. The company has been using some of this cash to return value to shareholders in the forms of a dividend and share buybacks.

At its own developers conference Apple announced several new programs to help expand its app business even further, and at least one of them will be probably be important to a brand new Apple product. The ecosystem looks like it is strengthening. 

HealthKit is a platform that will facilitate the development of health and fitness related apps and third-party hardware and many believe it will be closely tied to the long-awaited Apple smart watch, which is rumored to be on the way this fall. The company has been hiring medical professionals and is working with the world-renowned Mayo Clinic on the project. 

HomeKit is intended to be part of the growing Internet of Things, in which 40 billion objects might be interconnected by the year 2018. Apple is hoping to capitalize on this rapidly growing industry by offering developers tools to create apps that would control smart objects around the house. The company has gotten a jump on things already. Apple currently has partnerships with several manufacturers in this area. There is even an app available that allows the iPhone to automatically open a Kwikset deadbolt, for example. 

Google is playing around
Google's app business is not as robust as that of Apple and investors may not benefit as much from it. The typical Android user spends about $5 per year and those using iOS shell out about $21 annually on average. Developers know this and will focus on iOS when they create new apps. The apps that are better at generating revenue are likely to go to the Apple App store before Google Play and this gives Apple a head start on profits.

Google might have a hard time growing its app business in the future, even as it tries to release more products. The Android operating system is used mainly on low-end phones and the users in that market typically are not big spenders. Many do not even have credit cards for making purchases. Apple works only in the high end and reportedly has over 800 million credit cards on file in iTunes. That's plenty of money to draw from to grow its app business. 

Foolish conclusion
Analysts finally got a tidbit of data from Google regarding its app business. It appears that Apple is making more money, about twice the total amount and four times as much per user, than the search engine company. And two recent developer tools that Apple introduced, HealthKit and HomeKit, bode well for future growth in promising industries. 

Apple will win the app war in spite of the fact that Google may have won the operating system battle. Investors need to follow the money. It looks like it will flow to Cupertino instead of Mountain View.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Mark Morelli owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers